American Home Shield 2008 Annual Report Download - page 34

Table of Contents
of employee retention and severance and $4.1 million of recruiting and related costs. During the year ended December 31, 2008, the Company recorded
additional expense of $0.4 million relating to this relocation, which includes additional severance and other costs.
The restructuring charges for the year ended December 31, 2008 and the Successor period from July 25, 2007 to December 31, 2007 also included
approximately $0.3 million and $7.9 million, respectively, of charges, primarily severance costs, related to organizational changes made within the TruGreen
LandCare operations.
The Company incurred Merger related expenses totaling $1.2 million for the year ended December 31, 2008 compared to $0.8 million for the Successor
period from July 25, 2007 to December 31, 2007 and $41.4 million for the Predecessor period from January 1, 2007 to July 24, 2007. These Merger related
charges include investment banking, accounting, legal and other costs associated with the Merger, which cannot be capitalized as part of the purchase cost for
financial reporting purposes.
Impairment of Trade Names
During the fourth quarter of 2008, the Company recorded a non-cash impairment of $60.1 million to reduce the carrying value of its trade names as a
result of its annual impairment testing of goodwill and indefinite-lived intangible assets. See "Critical Accounting Policies and Estimates" for further details.
Key Performance Indicators
The table below presents selected operating metrics related to customer counts and customer retention for the three largest profit businesses in the
Company. These measures are presented on a rolling, twelve-month basis in order to avoid seasonal anomalies.
Key Performance Indicators
2008 2007 2006
TruGreen LawnCare(1)—
Growth in Full Program Accounts 1% 0% 1%
Customer Retention Rate 66.0% 65.5% 63.5%
Terminix—
Growth in Pest Control Customers 3% 2% 9%
Pest Control Customer Retention Rate 78.8% 78.1% 79.5%
Growth in Termite Customers 0% 1% 0%
Termite Customer Retention Rate 86.8% 87.6% 87.5%
American Home Shield—
Growth in Warranty Contracts (1)% 6% 2%
Customer Retention Rate 61.8% 61.9% 58.2%
•
During the third quarter of 2008, TruGreen LawnCare changed its definition of Full Program Accounts to include sales in the second half of the
year with the completion of the initial full program to occur in the first half of the following year. Prior to the third quarter of 2008 such sales
were reflected as full program accounts and included in customer retention in the first quarter of the year following the sale. "Growth in Full
Program Accounts" and "Customer Retention Rate" have been adjusted to conform to the 2008 definition for all years presented.
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